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MABS Self Help Tool

The MABS Self Help Tool will allow you to assess your debts, make out a budget and show you how to take the first steps in dealing with your creditors. It takes roughly 45 to 60 minutes to work through the tool.

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Self Help Guide:

Instructions

How to use the Self Help Guide

Give yourself 45 minutes to 1 hour to complete the Self Help Guide. Before you start, make sure that you have as much of your financial information to hand as possible. This will include:

If you are working out the budget for your household you may want to go through the Self-Help Guide with your partner. Be sure to ask them for their information including payslips,bills, receipts etc. If there is anything you don't understand as you go through the steps, check our glossary for an explanation.

Do you want to develop a weekly or a monthly budget?

WeeklyMonthly

STEP 1:

Assessing Your Situation

[Task 1 of 3]

Introduction

First, take some time to put together a full list of all the money you owe - this is vital to having a clear picture of your financial situation.

This section will help you to:

Understand the difference between priority and secondary debts

Make contact with those you owe money to

Identify debts for which legal action is pending or has already taken place

Understanding Priority Debts
Some debts are more important than others. Important debts (such as mortgage arrears, rent arrears, fines, and maintenance payments) are called priority debts. These must be dealt with first because not making repayments on them can have serious consequences. Examples of priority debts, and the consequences of failing to make repayments, include:

If you fail to make mortgage repayments your home may be put at risk

If you fail to pay your rent you could be evicted

If you fail to pay your electricity, gas or telephone bills, your service may
be disconnected

If you fail to pay a fine or a civil debt, you could receive a prison sentence

If you fail to make repayments on a hire purchase loan, your car or goods
on hire purchase could be repossessed

Understanding Secondary DebtsSecondary Debts are debts where money has been loaned to you without security and where the creditor does not have extra powers (such as repossession).

Examples of secondary debts include:

Bank overdrafts

Moneylender and catalogue debts

Credit card debts

Credit sales agreements

Credit union loans

Debts to friends and family

Personal loans with finance companies

You can be taken to court if you fail to keep up the agreed payments on these types of debts. However, as long as you don't ignore the problem and you respond to court documents you will usually only have to pay what you are able to afford.

STEP 1:

Assessing your Situation

[Task 2 of 3]

Write That Letter

It is very important that you contact those you owe money to right away to explain your financial situation. You can do this in person, by phone or by letter - although we suggest making contact by letter so that you have proof of contact with your creditors.

Remember to:

Write to a named person if you know one

Send it to the proper address

Check that you have provided the correct reference number

Keep a copy for your records

Online Letter Template
This template allows you to write and print an initial contact letter to your creditors. Simply fill in the name and address of the creditor and then modify the main text to suit your needs. Once you are finished, simply click the 'Print' button at the bottom of the page.

I am writing to you regarding the above account to inform you that I am currently experiencing financial difficulties and am trying to resolve them.

I am at present assessing my full financial situation, using MABS self help guides, and working out how much I can pay each of my creditors taking into account all of my
living expenses and commitments.

While I am doing this, it would be of immense help to me if you would put a hold on any action being taken to recover this debt and if you would suspend any interest
and other charges currently being added to this account.

I will contact you again within two weeks with my proposal.

May I take this opportunity to thank you in advance for your co-operation.

Yours sincerely

STEP 1:

Assessing Your Situation

[Task 3 of 3]

Make sure to set aside enough time to fill out your debt assessment sheet accurately. Also make sure you have a clear understanding of priority debts and secondary debts. Next, gather together all the documents necessary to complete your Debt Assessment Sheet. This includes:

Where you do not have the information you require, contact your creditor for an up-to-date statement.

The information provided here will be used in later steps to help determine your repayment schedule.
Don't forget to find and check all your original documents and contracts to ensure you are in fact liable for the debts. If you have any questions about this, contact the MABS Helpline on 0761 07 2000.

STEP 2:

Working Out Your Budget

[Task 1 of 6]

There is nothing mysterious about creating a budget. However it is one of the most important tasks to be done in addressing your financial situation.

This section will help you to:

Create a budget

Keep track of your spending using the Spending Diary

Fill in a budget sheet

Prioritise your spending

Possibly increase your income

What is a Budget?
A budget is simply a plan of the money you expect to receive and how you plan to spend it.
A budget will show you:

How much money is coming into your household

How much money is going out of your household

How much you can afford to pay those you owe money to

How you can best plan your spending in the future

How to work out a personal budget
The Personal Budget Sheet is an essential tool to help you to tackle debt problems and manage your money into the future. The information and tools in this section will help you work out how much you have coming in, and what you have been spending it on. It will also show you how much you have left over to pay your debts.

How to fill out your personal budget sheet
The Personal Budget Sheet allows you to see what your income and expenses are, in a safe and secure environment, on a monthly or weekly basis. It will also show you how much money you can afford to put towards repaying your priority and secondary debts.

Weekly or monthly?

Remember to fill in either weekly or monthly figures on your budget sheet, whichever best suits your needs. Be careful not to mix weekly and monthly expenses - stick to one or the other when filling in your budget sheet. To work out a weekly payment on a monthly basis, multiply the weekly payment by 52, and divide that figure by 12.

Utilities, such as gas and electricity (bills issue every two months). Multiply the total
for your last bill by 6 to get an annual amount then divide that figure by 52 (for
a weekly budget) or divide by 12 (for a monthly budget). If your usage is high, you can find out about energy efficiency from Sustainable Energy Ireland at
www.seai.ie

TV licence. Divide the total cost of your TV licence by 52 (for a weekly budget) or divide by 12 (for a monthly budget). This is a priority payment - if you don’t hold a current licence you may be fined

Hire purchase car loans. If you bought a car for work purposes using a
hire purchase type of arrangement, you will need to include these payments
in your expenditure or the car may be repossessed

Clothing and footwear. Estimate how much you spent on clothing and footwear last year and divide the amount
by 12 (for a monthly budget) or 52 (for a weekly budget). If you have children, don’t forget the cost of school uniforms

Education costs. This amount can be high, particularly if you have more than one
school-going child

Telephone: Include only your ongoing bill. If you have been disconnected,
treat the bill as an unsecured debt

Make sure you are realistic with your expenditure and only include items that are essential - but do allow something for a social life.

STEP 2:

Working Out Your Budget

[Task 5 of 6]

Income

Priority debt allocation

Now you should allocate payments towards your priority debts. They are displayed below with the amount left in arrears. Enter the amount you want to pay towards your priority debts in the input box below the amount of debt.

Try and leave some money left over for your secondary debts.

Priority Debt Allocation

Total available amount for secondary debts is €

Secondary debt allocation

Now you must allocate money towards your secondary debts. The best way to divide your remaining money among your creditors is called a pro-rata distribution. This just means that the largest debts get the largest portion of money and likewise, the smallest debts get the least. The more you owe a creditor, the more they should get from the money you have available.

Formula
The allocation for each secondary creditor is worked out using the formula:

Secondary debt amount X Total amount available for secondary debts divided by the total amount of secondary debt

If you do not want to use the pro rata method, just enter in the allocation you want in the input boxes corresponding to each creditor and Click the button at the bottom "Click here to reallocate payments to the secondary debts"

STEP 3:

Dealing With Your Debts

[Task 1 of 2]

Send a letter to each priority creditor outlining what you can afford to offer along with a copy of your financial statement. Be sure to include the following:

Your account number or reference number

Explain why you are in financial difficulties (for example due to sickness, unemployment, or relationship breakdown)

Tell them when you will be able to start payments and how much they will be. Only
offer what you can afford in addition to your normal payment

Ask your creditor to suspend interest and other charges if
appropriate

If your offer is accepted:

Write to the creditor to thank them for their co-operation

Make sure you get the acceptance of your offer in writing

Inform them of the method of payment you intend to use

Include your first payment

If your offer is not accepted:

Write again to your creditor asking that your offer be reconsidered

If your creditor refuses to freeze interest and other charges, point out that your offer was based on interest being frozen - and otherwise the debt will not reduce

Remember, if your creditor continues to refuse your offer, they will have no option but to bring you to court to enforce their debt

If your agreement is a hire purchase agreement and you have paid
back one third of the loan your creditor cannot automatically repossess the goods without a court order

Other Debts

As with your priority debts it is best to communicate with creditors about secondary debts in writing, enclosing a copy of your financial statement. In some situations creditors may have sent the debt to a debt collection agency. If that is the case, write to the debt collection agency and send a copy to your creditor as well.

How to make an offer - Secondary Debts

Send a letter to each secondary creditor outlining what you can afford to offer, along with a copy of your financial statement. Be sure to include the following:

Your account number or reference number

Explain why you are in financial difficulties (for example due to sickness, unemployment, or relationship breakdown)

Also explain that the payment offer you are making is on a pro-rata basis

Tell them when you will be able to start payments and how much they will be. Only
offer what you can afford in addition to your normal payment

Ask the creditor to suspend interest and other charges if
appropriate

If your offer is accepted:

Write to the creditor and thank them for their co-operation

Make sure you get the acceptance of your offer in writing

Inform them of the method of payment you intend to use

Include your first payment

If your offer is not accepted:

Write again to your creditor asking that your offer be reconsidered

Include with the letter a payment in the amount you offered

Tell the creditor if your offers to other creditors have
been accepted

If you creditor refuses to freeze interest and other charges,
point out that your offer was based on interest being frozen - and
otherwise the debt will not reduce

Remember that, if your creditor continues to refuse your offer, there is nothing they can do to get their money without going to court

Note:If your agreement is a hire purchase agreement and you have paid back one third of the loan your creditor cannot automatically repossess the goods

STEP 3:

Dealing With Your Debts

[Task 2 of 2]

Write That Letter

It is very important that you contact those you owe money to right away to explain your financial situation. You can do this in person, by phone or by letter - although we suggest making contact by letter.

Remember to:

Write to a named person if you know one

Send it to the proper address

Check that you have provided the correct reference number

Keep a copy for your records

Online Letter Template
This template allows you to write and print an initial contact letter to your creditors. Simply fill in the name and address of the creditor and then modify the main text to suit your needs. Once you are finished simply click the 'Print' button at the bottom of the page to print your letter (remember to print 2 copies, and keep one for your records). We recommend that you send this initial letter to your creditors by post.

You can also download a Microsoft Word version of this letter at the bottom of the page.

Type your address here

Type recipient's address here

Date

Insert Account/ref number

Letter text:

Print
We would recommend that you print and post your initial letter to your creditors.

Further to our recent correspondence, I am writing to advise you that I have now completed a full assessment of my current financial situation taking into account all of my living expenses and commitments.

In my efforts to address my situation I have used MABS self-help guides to work out affordable proposals.

As a result I am now putting forward an offer of €_________ per week/month as being realistic in my current circumstances. If my circumstances change and I can increase this offer I will contact you immediately.

In the meantime, I hope this proposal will be acceptable to you. I would be grateful if you would suspend any interest and other charges being added to the account to help me resolve my difficulties as soon as possible.

I look forward to hearing from you.

Yours sincerely

STEP 4:

Manage Your Payments

[Task 1 of 1]

Introduction

Once you have made your budget and decided how much you need to cover living costs, arrears and credit commitments, the key to staying in control is to find the cheapest and most convenient way to pay as many of your debts as possible when you receive your weekly or monthly income.

Choose a method that is not time consuming. If possible, set up a bank
account in which you can deposit on a weekly or monthly income basis to pay your
utility bills and other credit agreements

If you are paid weekly, then make a weekly budget. Put aside the weekly portion of the
amount you will need to your weekly, monthly or yearly bills

Choose a method of paying your bills that is the most convenient - choose
a service that is near to where you live or work

Shop around for the cheapest method -some services may charge a fee

How to Pay Creditors

Direct Debit:
You can pay your mortgage and other bills through a direct debit facility in your bank. Some banks charge a fee for this, so shop around for the option with the cheapest bank charges.

Internet Banking:
You can set up a facility on the internet to pay your utility bills as well as your credit card and loan repayments. Your bank or utility supplier will supply you with the information necessary to set this up.

Bill Pay
This is a free service for paying bills at your local post office. Enquire at your local post office for more detail.

An Post Household Budget Scheme:
If you receive a payment from the Department of Social Protection you will have the option of making your Local Authority mortgage or rent payments through An Post. These payments are taken directly from your allowance before you receive it. You can also pay some utility and phone bills in this way. The scheme is available to many types of Department of Social Protection payments, but not all, so check with your Social Welfare office. (Note that the maximum that can be deducted for bill payment is 25% of the total amount that you receive.)

If you miss a payment :

Contact your creditor immediately

Tell them why you missed the payment

Try to pay that missed payment in full on the next payment date
or ask the creditor to spread out the missed payment over a few payments

If your situation changes :

If there is a change in your circumstances and you are unable to keep to the payment plan you have agreed with your creditors, then contact them immediately

Contact them (preferably by letter or email) outlining the details of your new circumstances, how long it is likely to last and how much you can offer to pay now

Ask for this new offer to be accepted for a set period, usually 3 or 6 months

If you have been paying by direct debit, be sure to cancel the direct debit at your bank or change it to reflect your changed circumstances

If your circumstances change for the better and you can pay more, contact your creditors with an improved offer